Investing in veterans

The era of major hydropower developments in Norway is over. Instead, Statkraft faces a time of major renovations and is reinvesting NOK 12 billion in upgrading power plants.

On the slopes overlooking Statkraft’s Korgen dispatch centre in Nordland County, a tunnel boring machine has started digging into the rocks. In the next few months, the machine, weighing in at 1600 tonnes, will create several kilometres of tunnels for the new Nedre Røssåga power plant. This is the first time such a machine is used in Norway since the early 1990’s.

The expansion project at Nedre Røssåga is just one of many investments in Norway in the coming years. Nedre Røssåga alone will cost NOK 1.7 billion, while the brand new Kjensvatn power plant close by costs NOK 360 million.

Ageing facilities

Many of Statkraft’s hydropower facilities in Norway and Sweden are ageing. Their average age is now 45 years. When a hydropower plant turns 50, it is ready for retirement, from a technical viewpoint.

“We’re entering a period where power plants from the 1960’s are nearing their 50th anniversary. The 60’s was the decade with the most hydropower developments in Norway. When so many plants are ageing, we’re entering a time for many major renovations,” says Erik Høstmark, head of the Asset Ownership unit.

These ageing facilities lead to a cost increase in Norwegian and Swedish hydropower in a near future. In 2014 alone, Statkraft will be reinvesting about NOK 2 billion in Norway and Sweden, and the annual amount will increase towards NOK 2.8 billion in 2016. In total, around NOK 12 billion will be reinvested during the period from 2014 to 2018.

In Norway, the annual maintenance budget, which includes projects with budget of less than NOK 300 million, will increase almost 40 percent from 2014 to 2016. From 2016 to 2020, the costs will total around NOK 1.25 billion per year in Norway.

An infinite resource

Hydropower is, in principle, an infinite resource. However, the different components have varying lifespans. Control facilities and management systems must often be replaced after 20 years, while transformers can last 50. Rock tunnels can last forever.

“If you’re a mechanic, there’s almost no end to how long you can fix a Volvo,” says Erik Høstmark. “If you’re careful to replace parts, the car can last a long time. Although the tyres get worn out, the body will remain.”

“Our philosophy is to utilise as much as possible of the power plants’ value before we build something new. For instance, Nore I from 1928 will be almost 100 years old before we replace it with a new plant.”

The renovation of Nedre Røssåga and the building of the new Kjensvatn power plant will increase the total power production in the region by 280 GWh, corresponding to the consumption of 14,000 households.